Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Sunday, November 18, 2007

Measuring the Rate of Return for Competition Law

Posted by D. Daniel Sokol

Paul A. Grout (Department of Economics,  University of Bristol) and Anna Zalewska (School of Management, University of Bath) offer an interesting article in Measuring the Rate of Return for Competition Law.

ABSTRACT: This paper focuses on the application and interpretation of measures of rate of return for competition law. Amongst other results, we analyse how outsourcing and similar arrangements impact the rate of profitability and show that the measurement is more volatile the greater the rate of profit (suggesting that the measures are most problematic when they are most needed). We identify and interpret the outsourcing arrangements that provide the lowest rate of profit and show that these arrangements have a close relationship to net present value. Finally, we provide suggestions to make profitability measures more informative for competition law.

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